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Digital Bazar's Bitmunk Legal P2P Network Takes On Online Music Stores Consumers who visit any of the legal online music stores that offer à la carte downloads will find pretty much the same thing - 99-cent downloads, all the major artists from all the major labels, hundreds of thousands of songs from the better-known independent labels and some "exclusive" tracks that you won't find on any competing service. Some may have a couple thousand songs that the others don't, a couple charge a few cents less per song, but most of the content is the same. The differences are in the format of the songs - WMA, AAC - and the usage rights allowed on each track. Some, like iTunes, have the same usage rights for all songs. Others, such as BuyMusic.com, let the labels decide how many times a song can be copied and whether it can be transferred to more than one portable device, that sort of thing. Some users might be put off with songs costing the same whether they're new or old, from a hot chart-topping artist or an unknown, or only being able to download the song in WMA when their CD player doesn't support that format. These are the folks who might return to that bane of the music industry - those pesky peer-to-peer networks and the lower quality MP3 format which cannot be copy protected. A start-up called Digital Bazar, however, has designed a new system called Bitmunk that takes all the benefits of the legit online music stores - clean, legal copies of songs that pay royalties to the artist, have no viruses and don't threaten fine or imprisonment for downloading files - with the freedom of a P2P network - download what you want in the format you want from wherever you want. It also gives users a piece of the action, letting them decide the percentage they get from the sale of each file downloaded from their computer. "Bitmunk is not an online music store, rather it is a digital file marketplace," Digital Bazar co-founder, president and CEO Manu Sporny said. It lets artists list their songs and albums for sale, associate a royalty with each song and have the money deposited directly into a bank account. Fans who want to push an artist's work can resell the songs on the Bitmunk network, with the artist getting a cut, the fan getting a cut and Digital Bazar getting a cut. Sounds like utopia. Unlike a couple other systems out there, such as Weed from Shared Media Licensing and Payshare from the Swiss firm ANNO 2003, Bitmunk gives users a straight cut of the songs downloaded from their PCs rather than use a "pyramid" scheme that pays out different percentages depending on how far down from the top of the downloading pyramid the peer is. And the others attach digital rights media to their files, Bitmunk doesn't, saying that once someone buys and downloads a file, it's his to listen to on any device he wants to, wherever he is. Here's how the thing's supposed to work: - A guy wants to support his favorite band and make some pocket money at the same time by selling a few tunes over the Bitmunk network. - He visits the site and searches the database of 4.2 million registered songs. - If the song he wants is listed, he can check to see if the artist allows fans to resell it. - If the artist says it's okay, the fan can download the Bitmunk Sales Server, check to see the royalty rate the artist wants from each download, set a price for the song and wait for another fan to come along and download it from him. - If there is no notation next to a song title, chances are the artist isn't aware of Bitmunk. If the fan still wants that particular song, he can click on the "petition" button in hopes of getting the song added to the list of those he can sell. According to Sporny, once Digital Bazar has enough petitions for a song, it will go to the artist and say, "We have 50 thousand fans interested in buying or selling your song on the Bitmunk P2P network. You can determine the royalty you get for each download. Can we sign you up?" All files on the network have been approved by the artist. Although there's no DRM attached, the company does use digital watermarking to track the files to deter users from pirating tunes. Besides, anyone on the network can sell work they've created, providing international exposure for unknown musicians who don't have a record contract. Following that thread, Sporny notes that these same unknowns, if their songs sell well, can take the sales statistics, go to a label and say, "See how many people have bought my song? How about considering a contract so I can put a full album out?" The available sales data can help artists see where their music is selling best to help with tour planning and marketing. Digital Bazaar doesn't take an upfront fee from the sellers. Instead it gets 15 cents or 15% of each sale, whichever is higher. Although for starters Bitmunk will focus on music files (without restriction on the format), it will eventually open up to legal P2P swapping of DivX videos, DVD video and audio, TV shows and PDF and e-book files. Sporny says he and his team have been working on the Bitmunk technology for
two-and-a-half years. The beta version of the system is open for use by the
general public with no "risk, fees or royalties attached." The idea is
to keep the files on the beta system free for a few months as the company gets
feedback and decides what changes, if any, are necessary before going live with
the commercial system. "Making everybody comfortable with this new
distribution concept before we roll out the final service is vital," he
said. Back
to Headlines
The Cable TV, Phone and Satellite TV Wars Wall Street powerhouse Wachovia Securities worries that a price war with the satellite TV companies, coupled with a price war over broadband with the phone companies, will reduce the cable TV companies' profits and consequently their stock price. The satcos currently have about a 20% share of the pay-for-TV service market and are rapidly increasing it. The phone companies have about a 33%-35% share of the broadband market and are growing it, if only ever so slightly. Wachovia believes that offering broadband is good for the cablecos both because it's a high-margin business and because it helps them retain customers when the satellite companies beckon them. Watch These Numbers Change Cablecos Satcos Telcos Multi-channel TV 80%
20% 0% The three-way battle is an interesting one as each of the industries are either competing with the other two or threatening to. BellSouth, for example, said this week that it would start pushing TV programs to residences. DirecTV's Direcway intends to launch a satellite next year that will increase its ability to offer broadband. The cablecos are rolling out Internet telephony to their consumers whose residence is passed by their cables. Wachovia's price wars worries are: - Lessened because both DirecTV and EchoStar's The Dish have recently
announced price increases. Wachovia mentions the possibility that one or more of the regional phone companies might buy a satellite TV company in order to be able to bundle TV programming with phone services. It's unlikely that News Corp would sell DirecTV although it might welcome a partner with lots of cash. The more likely acquisition candidate is EchoStar and it's Dish service. As for the phone companies, a precedent for doing something jointly was set when SBC and BellSouth combined their faltering cell phone efforts to form the Cingular wireless service. BellSouth and SBC are using up a lot of their cash by acquiring AT&T Wireless for Cingular. However, BellSouth CEO Duane Ackerman sounded pretty desperate this week when talking to CNBC about the decision to offer TV programming to customers in the nine states where the company operates. He said that BellSouth had no choice: "In this environment, I believe if you're going to be here when the dust settles, you must adapt." Translated, it means that the pressure the cablecos are putting on the telcos in phone and broadband service is forcing the telcos to offer TV programming as part of a bundle of services. If BellSouth is feeling the pressure as Ackerman says, then the other telcos have to be worried too, because BellSouth has the highest monthly revenue per phone line and the highest operating margin of any of the so-called Baby Bells. BellSouth will now sell DirecTV in a bundle with phone and broadband services to its customers. It is more expensive and will take longer for the phone companies to add video than for the cable TV companies to add phone service. The cablecos have spent some $85 million in recent years to upgrade their networks. The telcos will have to upgrade their existing infrastructure with vDSL technology or possibly even replace it with fiber optic as Verizon has committed to doing. The telcos certainly have thought about acquiring a satellite TV company every time that they consider the cost, measured in the billions, and the time, measured in years, it will take to upgrade their networks. SBC, at the time that General Motors put DirecTV up for sale, publicly said it had considered making an offer. New services such as broadband, digital TV and video-on-demand are pumping up the cablecos' revenues and profits. Comcast, with 21 million customers, is the nation's largest cable TV company - more than twice the size of second place Time Warner Cable. Last week Comcast reported a 10.2% quarterly revenue increase and an earnings jump to a $262 million profit from the prior year's $22 million loss. Time Warner Cable reported a 10% revenue increase, mainly due to a 25% increase in broadband subscribers. Verizon's revenue increase of only 6% still led all the other regional phone companies. Most of Verizon's growth was also from new services, wireless and broadband. Verizon Wireless, which makes up 38% of the company's revenues, had a 25% revenue increase in the second quarter by adding a record 1.5 million new customers. BellSouth had only a 1% revenue increase. The company increased quarterly profits to $996 million from $951 million by cutting administrative costs by 6% - mostly because it eliminated another 538 jobs. Telcos Play Catch-up
Subscribers Q2 SBC
4.300
315,000 The cablecos have had the technology advantage of being able to deliver broadband to more residences than the telcos - and at a higher speed. The telcos' DSL has been limited by distance whereas the cablecos can deliver broadband to any home that one of its wires passes in front of. The cablecos also have a speed advantage. Time Warner Cable said last week that it would offer a 6 Mbps service for $64.95 a month or more depending on whether or not it's bundled with other services. Comcast plans to start offering a 4 Mbps service for $52.95 monthly compared to its 3 Mbps lines for $42.95 a month. Technology upgrades have recently enabled the telcos to increase their broadband coverage and speed. The telcos have been playing "catch-up" to the cablecos in broadband by offering lower prices such as Verizon' $29.95 a month for a 1.5 Mbps connection although it plans to launch a 3 Mbps line in the next few months. Assuming that the telcos get into the TV delivery business by one method or another, the next hurdle for the cable TV companies could be cell phones. The telcos have pretty much locked up the American mobile business. When Cingular completes its acquisition of AT&T Wireless later this year, the telcos will own 85% of the US market - Cingular will become larger than Verizon Wireless. The telcos, by adding cell phone service to their bundles that would already include TV, landline phones and broadband, would make it harder for the cablecos to compete. Back to Headlines
BellSouth, considered the most conservative of the four regional telcos, has recently refocused its capital spending to acknowledge the intrusion of the Internet and the cable TV companies. "We've shifted our capital spending to broadband and the Internet instead of the older switching technology, "said CFO Ronald Dykes. "It will increase and someday it will probably be 100%." BellSouth's spend on the Net and broadband increased from 25% in 2002 to 36% on this year's $3 billion capital budget. The purpose is to build infrastructure and re-wire the network to deliver video, as in TV programming, and Internet telephony. The telcos are fighting back in the broadband market. The three largest
telcos, Verizon, BellSouth and SBC, added a net of about 715,000 broadband
subscribers, about the same as the seven largest cable TV companies. Verizon's
broadband division grew 52.5% from the prior year's second quarter by adding
280,000 broadband subscribers for a total of 2.9 million. Comcast remains the
nation's largest broadband provider with six million customers. Back
to Headlines
The US cable TV companies have stung the telcos badly, first with their dominance of the new and highly lucrative broadband business - unlike anywhere else in the world. Now their Internet telephony (VoIP) is threatening the telcos' core business, the cash cow they've had to themselves for a hundred years. Their actions have now driven the telcos to partner with the cablecos' biggest enemy - the two satellite TV companies. About one in four American homes that pay for TV service now get it from one of the two major satellite services, News Corp's DirecTV or EchoStar's The Dish. The pair will add about two million new customers this year. Meanwhile, the American cablecos have lost 900,000 subscribers over the last two years, according to Kagan Research in a Wall Street Journal article. Comcast, Cox and Time Warner Cable, the three largest cable companies, lost 171,000 subscribers in the second quarter. EchoStar alone added 360,000 new subscribers in the second quarter. Comcast has reduced its projected 100,000 increase for 2004 to a break-even. The satellite TV companies have picked up some deep-pocket partners that have the look of desperation in their eyes - the four regional telcos. SBC said last week that it sold 100,000 new EchoStar subscriptions in the second quarter. Verizon has been very aggressive at selling DirecTV. BellSouth said this week that it too would sell DirecTV. The telcos need a TV package to bundle with their phone service in order to compete with the cablecos, which are now bundling phone service with their TV programs. Satellite TV's Deep-pocket Sales Partners Service Telco Resellers EchoStar SBC, Qwest, Sprint, EarthLink The satellite TV companies have had several advantages over the cable TV companies: - Better quality digital picture at the basic price. A package of 60 EchoStar channels goes for $30 a month versus over $40 a month from the cablecos for a comparable package that is in lower quality analog. - Generally acknowledged better customer service and support. The cable companies have a long history of questionable customer care, something that the satellite companies have worked to prevent. - High rate increases over a number of years. The cablecos' repeated price hikes have almost stimulated congressional action on several occasions. - DVRs. Both EchoStar and DirecTV have been very aggressive at offering digital video recorders, something that the cable companies are just now getting around to. DirecTV has become the world's largest DVR reseller and improved TiVo's financial results. The cablecos have retaliated by offering digital TV, albeit at an extra $10
or more monthly, DVRs and video-on-demand (VOD), which requires that the
customer sign up for the digital service. A limited selection of VOD is
available from the satellite TV services. The cablecos have been able to
increase their revenue while losing subscribers because they have been very
successful selling broadband and premium services like digital TV. They are also
bundling phone, broadband and TV programming, which helps them compete with the
telcos and increase their average revenue per customer. The impact on the telcos
is significant - the number of landline residential phones is expected to
decline 8% this year. It is not clear, however, how the cable TV companies will
maneuver to withstand the onslaught by the telco-satco combine on their own core
TV business. And the telcos, with an 85% share of the cellular market share,
have that trump card to play as well. Back
to Headlines
Surgery Puts Jobs Out for August Steve Jobs, age 49, sent an e-mail last Sunday from his hospital bed to Apple and Pixar employees, reportedly using Apple's Airport Express, saying that he was taking an August sabbatical to recover from a supposedly non-life-threatening cancer surgery. Apple has been on a roll of late, led by the two most successful digital media products to appear so far - unless broadband is included. iPod and iTunes have given Apple the lead in the digital media sweepstakes, outpacing larger PC and CE companies such as Sony, Dell and Microsoft. It was Jobs' persuasiveness that convinced the labels to let him implement a straightforward 99 cents a track, $9.99 a CD, online music service with a minimum of intrusive copy protection. No person runs large and complex organizations like Apple and Pixar without a number of able executives. Timothy Cook, Apple's executive VP of worldwide sales and operations, will lead the company during Jobs' absence. Jon Rubenstein, senior VP of the iPod division, chief software technology officer Avadis Tevanian, retail senior VP Ron Johnson and others will continue to help run Apple while Jobs is away. Jobs and Steve Wozniak founded Apple in 1976 at the birth of microprocessors and the PC industry. Notable achievements for Apple include: - The first PC with a graphical user interface, Lisa, was the immediate predecessor to the Macintosh. Based on concepts that Xerox had first implemented, the Macintosh inspired Microsoft to develop Windows, today's dominant PC operating system. - The first to implement the PostScript language, which led to the growth of the desktop publishing industry and products such as Quark. - The Apple LaserWriter laser printer implemented PostScript on a Canon laser printer to make high-quality printing possible for laser printers. Jobs subsequently lost control of Apple to ex-PepsiCo CEO John Sculley and
the company went into a slow downward spiral under Sculley and his successors.
Since Jobs' return to Apple, the company has rejuvenated its PC line with such
as the iMac, PowerMac and PowerBook. The online music market was still in a
tidal pool when Apple's iTunes burst on the scene. Its iPod has been the most
successful digital media player and has created what is called the iPod
phenomenon for the market demand that it has experienced. Back
to Headlines
Visitors to the Web site of DVD backup software maker 321 Studios will see the following message: "321 Studios regrets to inform you that it has ceased business operations including, but not limited to, the sale, support and promotion of our products. Despite 321 Studios' best efforts to remain in business, injunctions entered against 321 Studios by three US federal courts earlier this year has resulted in 321 Studios no longer being able to continue operating the business." The St Louis concern battled with the movie industry for most of its short life. The studios claimed that the copy protection circumvention technology built into 321's software that let consumers make backup copies of commercially released DVDs violated the Digital Millennium Copyright Act. 321 claimed that even though its DVD X Copy product might be used to make pirate copies of DVDs, its main - and only approved - use was to make a spare copy of a disc in case something happened to the original. After several long - and obviously expensive - legal fights, the company lost and was ordered to stop selling software that included the "ripper" code that let users duplicate copy-protected discs. The company then came out with "ripper-free" versions of the software, but its Web site continued to point visitors to other sites where they could get shareware and freeware rippers. Promising to fight on and appeal all the litigation against it, 321 then fired most of its staff and, blaming the money it lost on the court cases, said in June that it was considering filing for Chapter 11 bankruptcy protection. Guess it never quite made it. The Web site says that the company can no longer offer any kind of customer support for its products and asks creditors and customers waiting for rebates to contact specific e-mail addresses. Anyone still interested in 321's software - the versions not enjoined - can visit software distributor www.jambalayabrands.com for some closeout products. So, how does 321 founder and president Robert Moore feel about the situation? "We're finally starting to get the message that somebody wants us dead and they are not going to stop before we are dead," he said. The company's lawyer Michael Page told Wired News that 321 "couldn't
afford to do business and fight all the legal fights. They essentially got sued
out of existence." Back
to Headlines
DivX to Move 20m CE Devices by Christmas If anyone out there (like Faultline) thinks that there is room and enthusiasm for film download services like Movielink and CinemaNow, but ones which are properly run and which actually want to grow, they could do worse than take a long hard look at what DivX is up to. The 100 man start-up is on its third round of funding and has already passed into profit and is getting ready for a massive Christmas that could quadruple its revenues overnight. The company has been working for three years towards a scenario when CE manufacturers bundle the DivX MPEG-4 based-codecs into equipment that is sold in retail. So far it has sold two million such devices, but reckons it will sell a further 18 million by Christmas. Big jump. The fundamental difference between DivX and other codecs is that it is not trying to get video into the narrowest stream it can, but is trying to get the file size down to the smallest it can manage. DivX claims that its codec encodes video three times faster than Microsoft's VC9 codec and gives a file that has 30% better visual quality. Today it says its file sizes are seven to 10 times smaller than those on DVDs and it says that a two hour film encoded with DivX can be downloaded on a half-a-megabit broadband line in under 45 minutes, and that by using progressive downloads (download enough of the film so that the rest can download while you are watching it) users can begin viewing films in full-screen, high-quality format a few minutes after the download has begun. This week it has announced that another major portal, Libero.it in Italy, is taking its entire package, its encoding services, compression software and DRM system, to launch a 4,000-item video library to its eight million customers. Libero is part of Wind Telecomunicazioni SpA. Italy is one of the most competitive and innovative markets in video-on-demand, with streaming services launched successfully there through e.Biscom's FastWeb service. The FastWeb service was the first and is currently the largest fiber-to-the-home video-on-demand service provider in Europe with 290,000 customers. DivX spokesman Tom Huntington told us, "We've been working on this for three years. We went to the MPAA (Motion Picture Association of America) and they made it clear to us that they would not look at us until we had 10 million customers and that they were not interested in a system that involved a PC. They also helped us with our digital rights management scheme that we built ourselves. "So we've been quietly going about our business, first selling the codec to work in software, then we interested a few smaller consumer electronics firms to bundle in our codecs, then some of the integrated circuit manufacturers put it into silicon, and now the major CE firms are virtually all coming out with products between now and Christmas." That list includes Panasonic, Philips, Toshiba, JVC, Pioneer and Thomson, all of the big names except perhaps Sony. "We have chip licenses now with MediaTek, Philips, LSI Logic and ESS, all the companies that make integrated circuits for DVD players," said Huntington. The DivX vision is to see DVRs download remote content for playing, burning it into DVDs or viewing through set-tops that simply play the stored file. "We had to write our own digital rights management software which works by first registering each CE device online and uses our remote servers to store encryption keys and permissions. Once a piece of content has been given permission to play on a registered player they no longer have to be online, but the first time it is played, it needs to connect. But we make that process completely seamless for the customer," he said. The DRM system can then support multiple business models such as five-day rental or a set number of views or even outright purchase, depending on what content owners require. So does all this mean that the major studios are about ready to release content for delivery under DivX care? "It's been a long process but we think that the major studios are about to give us access." Whatever the outcome with the studios, DivX will have trouble shaking off its image of a slightly seedy start-up. Many of its early releases through its Web portal partners were adult films or anime or extreme sports, whatever content it could get in the early days, although it has amassed 17,000 pieces of content in total. For Libero though the content is mostly Italian, including TV series and indigenous films, peppered with some US films at the end of their exploitation cycle. In all DivX is encoding 4,000 pieces of content for the Libero site although it has yet to announce how it will charge for these, via subscription, pay-per-view or a hybrid. And as for the claims about shipping 20 million DivX-branded devices by Christmas, if that happens it will be a campaign almost as impressive as Apple has achieved with the iPod, and video downloading will at last be on the map. And which Hollywood studio is going to say no to releasing first run content onto a market of that size as it enters the DVD point in its exploitation cycle. This story appeared in our sister publication Faultline, published by Rethink
Research. E-mail rhett@riderresearch.com for subscription information and rates.
Back
to Headlines
The Intel Digital Media Vision: "Any Time, Anywhere and On Any Device" Intel's vision of digital media's future is summarized in a press statement announcing that CEO Craig Barrett will deliver the keynote address at next year's CES: "Intel CEO Barrett believes that more than two decades of technology
innovation - including the personal computer, the Internet, the proliferation of
digital devices that connect to PCs and the onset of wireless communications -
has set the stage for even more change in the digital home. In Intel's vision of
the digital home, consumers will be able to enjoy content such as movies, music,
games, photos, communication and information at any time, anywhere and on any
device. Barrett said that as PCs and CE devices come together and broadband
connections and rich digital media become increasingly available, new
opportunities will be created for the computing and consumer electronics
industries, content providers and consumers worldwide." Back
to Headlines
American IDC said it's launching its Broadband Internet Television system in China. Earlier this year the company launched the streaming site www.etvhollywood.tv and the download site www.ninety-nine-cent-movies.com, both of which offer classic Hollywood films in high-definition quality video. Now, it's taking its technology across the world. According to CEO Gordon Lee, American IDC will enable Chinese TV stations to
offer such value-added services as downloading content on-the-fly and nationwide
interactive live TV. "American IDC will enable the Chinese television
stations to provide the Chinese public with interactive national networks via
the Internet," Lee said. Back
to Headlines
***************************************************** Streaming Media West Conference & Exhibition Santa Clara Convention Center (800) 300-9868 [(609) 654-6266] info@streamingmedia.com www.streamingmedia.com/west ***************************************************** Alphabet Soup: DSL, ADSL, VDSL DSL has been the accepted moniker for the broadband service that the phone companies have offered in competition to the cable TV companies "cable modem" technology. Because most phone companies until recently only offered one kind of DSL, Asymmetric Digital Subscriber Line (ADSL), DSL was the generally accepted designation. The cable TV companies have increased the speed of their broadband connection and are forcing the telcos to do the same. The telcos also want higher-speed broadband to the home in order to offer TV programs and video-on-demand. The phone companies are deploying two new technologies to make higher speeds possible: Fiber optic and VDSL, which uses a combination of fiber optic and existing copper wire. Fiber optic requires a completely new network including the physical wire from the phone company's building to the home and all the associated infrastructure gear. VDSL (very high bit-rate DSL) is capable of downloads speeds as high as 52 Mbps and upload speeds upwards of 16 Mbps. ADSL has a theoretical speed of 8 Mbps to 10 Mbps, about the same as cable modem. In actuality, most ADSL is from 1.0 Mbps to 1.5 Mbps. The cable companies can squeeze higher actual speeds from their technology and the coaxial cable they use, which has made it possible for them to offer download speeds up to 6.0 Mbps - for an extra monthly fee, of course. Cable modem technology has another advantage. The distance from a central office, unlike ADSL and VDSL, does not restrict it. Because cable TV subscribers share the line, cable modem technology has the disadvantage, unlike DSL, that as new users are added and more use the same line, shared bandwidth causes a speed decline. Cablecos fix the bandwidth-sharing problem by creating a new channel to the cable and then splitting up the users into separate groups. The advantage for the phone companies of VDSL compared to fiber optics is that VDSL does not require all new wiring from the phone company to the residence. The cost of rewiring every city and village to install fiber optic is enormous and would take years. The cost of such a massive undertaking is the reason that cable TV companies still have so much debt. The Two DSLs Type Down Up Distance ADSL 8 Mbps 800 Kbps
18,000 ft VDSL, however, has an even more severe distance limitation than ADSL. It
works over copper wires for only about 4,000 feet - 1,200 meters. The workaround
for the phone companies is to lay fiber optic cable to a point in the
neighborhood where it then connects to the copper wire that runs into the home.
Called "Fiber to the Neighborhood," the method significantly reduces
the telcos' costs. Fiber to the home, "Fiber to the Curb" (FTTC) would
increase speeds even more significantly but at a much greater expense in labor.
Verizon has committed to fiber optic to the home for its customers. BellSouth
and SBC are committed to ADSL and a combination of fiber optic and copper wire.
Back
to Headlines
BellSouth Gets Serious about DirecTV Bundle Atlanta-based BellSouth has started bundling the DirecTV satellite TV service with its local, long distance and cellular phone service and broadband. BellSouth deducts $30 a month for customers who sign up for the full bundle including DirecTV, DSL broadband ($30 a month if purchased separately), unlimited local and long distance calls and, something the cable TV companies cannot match, cell phone service from Cingular. BellSouth owns 40% of Cingular with SBC owning the other 60%. BellSouth started offering DirecTV about a year ago but only this past Monday did it get aggressive about selling the service by bundling it with its other offerings. There are certain rural areas where the National Rural Telecommunications Cooperative has exclusive DirecTV distribution rights that are not covered by the deal. The move is sure to sell some more TiVos because BellSouth customers can also
purchase a TiVo-based DirecTV receiver for $99 and get DirecTV's TiVo service
for only $4.99 per month. The monthly TiVo fee is waived for subscribers to
DirecTV's Total Choice Premier package that includes most of the TV channels
that DirecTV offers. Back
to Headlines
Cox Cable, the fourth largest cableco in the US, added 97,517 broadband
customers in its second quarter, bringing its total to 2.24 million high-speed
Internet customers. Cox Enterprise, which already owned the 62% of Cox Cable
that is not publicly traded, this week offered to buy the remaining 38%. The
cable TV industry has taken on a lot of debt in recent years, investing $85
billion to upgrade its infrastructure to handle video-on-demand, Internet
telephony and digital TV. The stock market has brought down the share prices of
cable TV companies by about 30% so far this year. Cox Enterprise, owned by the
Cox family that founded what became Cox Cable, and its financial advisers
obviously disagree with the way Wall Street currently values the cablecos, at
least as far as its own is concerned. Back
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On the Future of Broadband Pricing From Faultline Issue 68, August 2, 2004 Broadband over power will be with us, certainly in the US, as a commodity, within two years, perhaps three. It is underpinned with a CPE cost of about $200, installation costs of about $150 per line and could take 3 Mbps broadband pricing to around $20 a month as perhaps the cheapest form of broadband in the US. Its advantage is that it will reach everywhere that power reaches, although it is likely to have a five-to-seven year rollout period. WiMAX and other broadband wireless technologies look like they're getting down to the same type of pricing. Its CPE will go sub $20 within two years, and shortly after the standard is set, base stations will go below $15,000 and head for $10,000 and there will be subsequent, micro base stations. The fact that it will operate in a triple (multiple) play with home telephony, mobile telephony and portable broadband (think Wi-Fi but with 20 mile circumference hotzones), means that the fixed home broadband element can be priced as low as operators want. The only costs are minimal support, backhaul and spectrum. If you happen to be an operator that's paid for your spectrum and it you already have your own backhaul. Operating costs are close to zero for WiMAX. It may hit the market at $40 a month next spring when Craig McCaw's Clearwire starts marketing, but we are looking at the prospect of broadband going so low in price that it's close to being free. We're serious about that. There is no reason why Clearwire shouldn't offer a broadband delivered TV service, or open its architecture so that others can. We know that both Verizon and SBC are currently reselling DirecTV and EchoStar satellite TV and have plans too offer their own TV services next year as their faster ADSL variants begin to hit. Power companies, telcos and wireless firms are all after this space. That's why prices are falling. In the meantime they are also spending serious money on fiber to the home which are going to start at prices as low as $34.95 a month for 5 Mbps. There is equally no reason why the power companies don't operate a triple or quadruple play of their own. With a 3 Mbps line to the home they can offer streamed TV to the home using either Microsoft VC 9 codec or the H.264 codec. They stream at roughly 1.5 Mbps and 1.25 Mbps. They could even allow a double tuner (watch one program, record another) and still leave enough bandwidth for someone to be using the Internet at 0.5 Mbps. So that's power, TV, high-speed Internet and what's wrong with putting VoIP over the line too. Using Homeplug they can save on wiring around the home (where you use your home power wiring as a distribution mechanism). The power companies, if they really go for it, could do a deal with mobile companies. We know of several deals where a cell phone is merged into a Wi-Fi phone. The cell phone companies don't have to bother putting in much of a network in a suburban area, because you use the phone at home through Wi-Fi to your broadband line. A soon as you go out it cuts over to being a mobile. The same is true for WiMAX networks, which could add TV services, and of course for the incumbent telcos. Once a giant like Verizon starts to move it can tear up the rulebook and give away broadband lines. Already with VoiceWing VoIP launched last week, Verizon took services that used to cost around $125 a month - local phones calls, long distance calling, discounted international calls, broadband internet and a $39 subscription to DirecTV, and brought the bundle to under $100. Effectively by using VoIP aggressively, it tore up the cost of high-speed Internet lines. So broadband at the low end could end up bundled in for next to nothing in
order to get the rest of a triple or quadruple bundle. DSL Extreme Offers 6 Mbps Broadband DSL Extreme, a tiny but growing broadband ISP, is offering residents in
greater Los Angeles, San Diego, San Francisco and Sacramento a special
high-speed DSL Internet service package for $59.95 as part of a special
three-month promotion. The package includes always-on download speeds up to 6
Mbps, upload speeds up to 0.608 Mbps. A special "Price Freeze"
guarantee locks in the promotion price for as long as service is continued with
DSL Extreme. Other features include 10 e-mail accounts with a total of 1 gig of
storage, 250 Mbps for personal Web space, game server access with gamer-specific
peering and unlimited Usenet news service. Back
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Cable TV Will Continue Broadband Dominance The cable TV companies will continue to dominate the broadband market, at least through 2008, according to the Yankee Group's "Broadband Subscriber Forecast." With help from the telcos' DSL, the company predicts, there will be more broadband subscribers than dial-up users by mid-to-late 2006. Generally, more than 95% of cable modem users are residential consumers; an estimated 15% to 20% of DSL customers are small businesses. Consumer v. Business Broadband Consumers Businesses Cable modem 95%
5% The Yankee Group bases its predictions on the ability for both broadband and
content service providers to generate additional services over the network that
will drive consumer use, such as voice, games, photos and video. Yankee Group
consumer technologies and services analyst Patrick Mahoney forecasts that by
year-end 2008, there will be more than 52 million broadband households. He said
that low DSL prices, increased speeds and increased availability caused the
company to increase its 2004 forecast. Back
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Broadband Threatens Current TV Delivery Models Broadband-transmitted video is becoming a real threat to the pay TV services that the cable and satellite TV companies offer, says ABI Research's "The Rise of Broadband Video," which examines the technologies involved and presents market forecasts broken down by technology and by region. Broadband-delivered video will redraw the map of supply and demand for the delivery of visual content, the company predicts. Several factors drive this change, according to ABI Research's Vamsi Sistla: - Film studios and record labels are losing their fear of digital distribution, partly due to the commercial success of music download services such as Apple's iTunes. - The telcos have realized that there are great opportunities for additional revenue if they offer their customers video over copper wire and fiber in the future. All of this depends, of course, on broadband penetration. At the end of 2003 there were over 85 million broadband subscribers worldwide, of whom 53 million were DSL subscribers, prime candidates for video-on-demand over broadband. Consumers are seeing a proliferation of digital devices in stores: TV tuner cards for PCs, digital media adapters to connect TVs and stereos to the PC and digital media servers. Netflix has already taken a small bite out of movie rental giant Blockbuster's revenue. ABI says that broadband video is the next thing to watch out for. The researcher says that it's "right around the corner" and "could pose a bigger threat to the prevailing video distribution landscape." This won't happen everywhere at once; regions with successful cable and satellite TV industries will take longer. But in markets with lower cable/satellite penetration, it's happening now, with a number of countries already rolling out DSL TV services. "Obviously there are initial shortcomings compared to cable or
DBS," said Sistla. "They won't be able to offer high-definition
quality content, for example - the data rate isn't high enough, and the
compression isn't at that level. But in future, xDSL and fiber or some
combination of both could be a very viable candidate to offer a high-definition
stream just like cable or satellite." Back
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BT Cuts Broadband Prices, Adds Grading BT has reduced the prices for its various broadband offerings, following a trend the DSL providers in the states implemented in their fight against the cable broadband outfits: - BT Broadband (512 Kbps) - down from £27 per month to £24.99. - BT Yahoo Broadband 512 Kbps - down from £29.99 per month to £26.99. - BT Yahoo Broadband 1 Mbps - down from £40.99 per month to £29.99. - BT Broadband Basic (512 Kbps) - remains at £19.99 per month, but now comes with a free modem and connection. All products will continue to offer free connection and modem when purchased online. BT has also implemented a "grading" method, otherwise known as a usage allowance, whereby heavy users will pay more than light users. The company said, "Until now, lighter users of broadband have been paying the same price as a small minority of exceptionally high users." To resolve this, BT will introduce "fair usage" allowances, which will permit lower prices for average users. It says that it's setting the usage allowances at levels significantly higher than the usage of the overwhelming majority of broadband customers. With the exception of BT Broadband Basic, the limits will only be advisory until Jan 2005. The 512 Kbps services, featuring a 15GB allowance, will still let customers to do all of the following each month: - Surf the Internet for 15 hours every day - Send/receive 250 JPEG pictures via e-mail per week - Download 250 music tracks and three hours of video clips per week - Listen to online radio for 15 hours every day - Send/receive 3,000 e-mails per week. BT boasts that all its products offer full broadband (512 Kbps and above). It says that at £39 a year, its 1 Mbps connection is cheaper than the cable company NTL. The company also says it remains committed to making broadband available to 99.6% of the UK by August 2005. BT currently has over one million retail broadband customers. Back
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Comcast Broadband Adds Video E-Mail Comcast and other broadband providers are adding new services and content to gain a competitive edge. Comcast's new Video Mail lets its broadband subscribers create video e-mail up to 45 seconds in length, using a Web cam. It can be used to send personalized video greeting cards and to share digital photos as a narrated slideshow. Comcast Video Mail messages are sent as a Web link and are streamed from a
secure server, where they can be saved for up to 30 days. A sample is available
at: http://videomail.comcast.net:8080/vm/jsp/vm_player.jsp?vmfile=/vmdata/67/60/VEM.PR5@comcast.net_1089899267635.wmv&vmpid=1004.
Comcast offers a 3 Mbps and a 4 Mbps download connection. Back
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Powerline proponents - those who are convinced that the electricity wires will be the best way to connect the home to the Internet and to network the homes' PCs and digital media devices - are adamant that their way is a viable third way. They are convinced, despite the jump that Wi-Fi, DSL and cable modem products have, that they bring a viable alternative. Coax proponents argue that the existing coax cable in the home is the only one capable of the speeds and copy protection needed for multiple streams of high definition video. Satellite proponents such as Direcway say that in the future they will be able to deliver the speeds needed for delivering content to the home. Powerline touters say that network products based on the HomePlug standard will be at least a part of complete in-home solution. Like the coax backers, they acknowledge that Wi-Fi will be used for things that need whole-house coverage such as on a porch or patio. Wi-Fi, or some wireless equivalent, will be used for small, battery-operated items that need live updates - a laptop being used for connecting to the Internet, for example. A summary of where the Powerline bunch stands at this point: - The HomePlug Powerline Alliance put together the HomePlug 1.0 specification for in-home networking, which is the only globally recognized standard for high-speed powerline networking. - HomePlug 1.0 networking products are shipping throughout North America, Europe and Asia. Hundreds of thousands of products are already in use. The products offer a convenient way to share broadband Internet services. Home networks based on HomePlug technology, they say, are far easier to install than the dedicated network cable needed for purely Ethernet-based networks, or for the optimum placement of wireless access points. - The next-generation of the in-home specification, called HomePlug AV is being developed from the ground up to support entertainment applications, such as HDTV and home theatre. HomePlug AV will provide a convenient and cost effective method of distributing HDTV in the home without new wires. The consumer electronics companies and service providers who are members of the Alliance are driving the development of HomePlug AV. - This year, the Alliance has started a process to define technology standards for Broadband Powerline (BPL) networks, which will allow utility companies and service providers to deliver Internet access to homes and businesses through the existing outdoor power lines. The Three Standards for Transmitting Data Over Electrical Wires Standard Status Description HomePlug
1.0
Completed standard for the networking products that connect to
the home's AC wiring. Broadband Powerline Specifications
standard for using the utility companies' elec- The Third Way High-speed Internet Connections In-home Networking The telcos' DSL
Wired network cable Satellite
Existing coax cable Back
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Synacor Adds Knology to Customer Roster Synacor, which sells bundles of premium content to broadband ISPs, has a new distribution partner in West Point, Georgia-based Knology. Knology will offer two tiers of Synacor's entertainment, sports, family and educational content, My Broadband and My Broadband+, to its broadband subscribers. It will use Synacor's Portelus platform to supply the content as well as the authentication, provisioning and unified login - all the content in the bundle is accessed through a single login. The packages range from $9.95-$19.95 a month and include NASCAR.com's TrackPass with PitCommand, MusicNow Radio, MusicNow Full Access with downloadable music, Clever Island, Encyclopedia Britannica, American Greeting.com, Shockwave.com GameBlast and anti-virus and parental controls from Zero-Knowledge Systems. If bought separately, the content subscriptions would cost $45-$60 a month. EarthLink, RCN and Susquehanna already provide premium content bundles to
their broadband subscribers using the Synacor platform. Back
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Comcast Broadband Adds Fantasy Football with "Trash-talking" Comcast continues adding content and services for its broadband subscribers
in order to differentiate its offering from that of the phone companies.
Comcast, largest broadband provider in the US with six million customers, has
teamed with Electronic Arts and become the exclusive distributor of EA Sports
Fantasy Football for the 2004-2005 NFL season. It's available to all Comcast
broadband customers. Comcast's new Video Mail service will let fantasy football
players to send video messages to each other and facilitate
"trash-talking" - boasting and bragging, one-upmanship and teasing
other players. Back
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What's Wrong with this Picture? The bulk of South Korean households will be connected to the Internet at a speed of 100 Mbps by 2010 according to Chin Daeje, the country's minister of information and communications. Like Europe and most of the rest of the world, the once-monopoly phone company provides most South Korean broadband. Yet, while European and North American phone companies are struggling to deliver 1 Mbps downloads, South Korea is already implementing 100 Mbps. The higher speed is needed to deliver multiple channels of high-definition video to the home - things such as movies, TV shows and other video content that will be developed for the Internet market. Broadband Speeds
Speed Europe, Canada,
US, Americas 1
Potential (millions) (millions) (US date format) Adelphia
0.951 324,236 - year
12/31/03 -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Broadband Scorecard International
Potential Belgacom (Belgium)
0.785 51.8% - year
12/31/03 |